Yes, rolling over a 403(b) to a Roth 403(b) plan is a taxable event and code 7 (normal distribution) is the correct code for box 7.
The reason this is taxable is that the original 403(b) is a tax-deferred account and the Roth 403(b) isn't a tax-tax-deferred account.
As you contributed to the original 403(b) account, the amount was subtracted from your taxable income reported for that year on your W-2 form. This is what's meant by tax-deferred account. You pay taxes on this money when it's distributed.
By rolling it over to a Roth account, you have distributed it. Roth accounts are funded with previously taxed income.
Rolling it over to a Roth account means you pay taxes on the distribution now, but there's no early withdrawal penalty. When you withdraw your Roth funds in retirement, they are usually tax-free.
If you didn't understand this amount would be taxable now, you should contact your plan administrator to discuss your options.
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